For the last three years Gunjan Taneja Sehgal, Noida-based IT freelancer has been on a journey towards healthy living, making attempts to reduce chemicals in her life. The first step was to discard the commercially available products to switch to safe personal care brands. She started with Soultree and over the years has tried several more including Just Herbs, Mamaearth etc. "One needs to get used to them; they form less lather and have a different kind of fragrance but it is worth switching. The difference in quality of skin and hair is clearly noticeable," she says. Now her entire family has converted to toxin-free products.
More consumers today are becoming conscious about their health and investing in clean products. "This year, people are spending more time at home, and salons have been closed, so they started doing their own research, understanding the role ingredients play and how can they take care of themselves better," says Shankar Prasad, Founder and CEO, Pureplay Skin Sciences that owns the vegan and cruelty-free beauty brand Plum.
Plum has grown 50 per cent over the last year, despite losing out on two months of business this year. Toxin-free baby-care and skincare start-up Mamaearth's founder Varun Alagh says, "We are significantly ahead of pre-COVID times and have grown 3-4 times over the last year." Currently, they get 2,00,000 orders a month.
Coimbatore-based organic skin and hair care brand Juicy Chemistry claims to have grown 5 times over the pre-COVID period. "It's amazing, we were not expecting to grow so quickly," says its co-founder Pritesh Asher. As more consumers came online, they invested in revamping their website. "We wanted to create a virtual experience that is similar to a customer entering a physical store. Since customers can't touch and feel the product online, we created content on how the product feel, the results, how to use it, when to use it," he says. They aim to close FY2020 with a turnover of Rs 25 crore, a 4x increase over the last year.
"Most of the brands, including ours, that started during 2014-2016 have seen at least 50 per cent jump in sales post April," says Raghav Sood, founder of toxin-free intimate wellness and sexual hygiene brand Skin Elements. He adds that they are reaping the benefits of being first movers in this space, being early on marketplaces and not having to fight as many players as there are currently.
So, what is driving this demand?
Kannan Sitaram, Venture Partner, Fireside Ventures says, "For the first time we are seeing the rise of the aware consumer who is concerned about pollution, environment and cleaner supply chains." They put a value on clean labels and safe products and are willing to spend more on themselves from their predecessor generation.
This is also the fastest growing consumer segment. World Economic Forum's report 'Future of Consumption in Fast-Growth Consumer Markets' suggests that by 2030, 77 per cent of India will be millennials and Generation Z.
Another big reason for the success of these beauty startups is the way the online ecosystem has evolved. "With the rise of digital marketing and online commerce, the capital requirement to scale up businesses has come down drastically. It is now possible to advertise with smaller budgets and sell in hinterlands without having a physical presence," says Sitaram.
All these brands get 80-90 per cent of their sales from digital platforms, the largest being their own website followed by marketplaces such as Amazon, Nykaa, Purplle. Mamaearth gets 3 million visitors a month on its online store.
These brands are also seeing increasing interest from tier three and beyond. Alagh of Mamaearth says in the last six months, contribution of consumers from tier three and smaller cities have increased. For instance, earlier they would get orders from 30 cities in Tamil Nadu but in the last five months, it increased to 60 cities. Shankar says while the top 15 cities account for 60 per cent of their sales they are seeing an increase in movement from smaller villages in Arunachal Pradesh and Kerela.
"With the rise of online commerce and deeper penetration of logistics players, access to brands has been democratised. Even young brands like ours can reach urban and rural areas alike. The lines between tier 1 and tier 3 will blur in the next 5-10 years," Shankar adds.
Most of these brands have a niche, whether it is organic or cruelty-free or vegan, and are focused on building their brand story around it. Alagh says, "We are working towards brand building and acquiring new customers to become a Rs 1,000 crore brand in the next three years."
But, Ankur Bisen, senior vice president, retail and consumer, at management consulting firm Technopak, has a word of caution. If a firm identifies a niche and scales it right, there is enough opportunity in India to reach Rs 100 crore sales in just five to six years time. But, it might be a challenge to maintain the growth momentum beyond that scale, he adds. "Most of these companies are an urban play so the challenge comes in mainstreaming the brand without losing their core value proposition."
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